Promoção do Setor Financeiro como Estratégia de Desenvolvimento Regional – O Caso do Nordeste Brasileiro

In Brazil, the inequality in regional development is very high and points to the Northeast as the region most affected, not only because of income inequality, education, social capital etc., but also by the inequality of the financial system. This article uses longitudinal data for the cities between 2000 and 2007 to test two main hypotheses: finance development contributes to economic growth in Northeast, as it does nationally and even internationally, and there is some bias against Northeastern counties in decisions to install bank branches. The tests rely on Barro and Sala-i-Martin (1992) standard growth regressions. The results confirm both hypotheses. As a result, the article argues that policies can contribute to the regional finance development and thus help fight the regional inequalities in Brazil. A first development strategy suggested is the elimination of bias in the installation of branches. Moreover, it is also suggested regionalization of reserve requirements and the IOF for the poorest cities in the Northeast and differentiation of the payment to the agencies in smaller cities by the Federal Government service.